Hong Kong Stock Exchange Publishes Report on Review of Financial Reports (with Joseph Lee Comment)
The Hong Kong Stock Exchange published a report summarizing the key observations and findings from its review of 120 annual, interim and quarterly reports released by listed issuers between May 2011 and September 2012. These observations and findings included:
- Issuers should be aware of disclosure requirements relating to financial information in the Listing Rules, in addition to disclosure requirements in accounting standards;
- Issuers should enhance their explanations of significant events and transactions in their annual and interim reports;
- Issuers should enhance their disclosures relating to goodwill and intangible assets and management should ensure that the assumptions for growth rates applied in their discounted cash flows are achievable over the period under consideration; and
- Issuers should follow good practices when providing non-International Financial Reporting Standards/Hong Kong Financial Reporting Standards financial information to ensure that such information is clearly distinguished from the financial information prepared in accordance with accounting standards.
The report also included an" industry theme" on telecommunications and internet services companies, a "general accounting review theme" on goodwill and intangible assets, as well as a set of findings regarding disclosure of non-International Financial Reporting Standards/Hong Kong Financial Reporting Standards financial information in financial reports.
Joseph Lee Comment: While the Hong Kong Stock Exchange has been paying attention to the compliance of financial statements of listed companies in Hong Kong in light of the "checklist" approach under the current regulatory regime, it is becoming equally important for issuers to improve the quality of management analysis and the discussion of their financials.Readers seeking more information on Hong Kong offerings may contact Joseph Lee, Jeffrey Maddox or David Neuville.
Click here to read the full report.